And after the way equities responded to the Fed’s retreat from September tapering, I expect Fed officials will be more hesitant to pamper the markets next time around.
How will the global leveraged speculators game this? Play for further “how crazy do things get” speculative excess at the “core”? Push the melt-up dynamic in U.S equities for all it’s worth – squeezing the shorts and hedgers at each and every opportunity? Or does the unfolding “risk off” dynamic continue to expand, as was the case for much of this week? Are we in the early stages of a problematic de-leveraging throughout global fixed income, a predicament exacerbated by the ongoing Bubbles in “core” equities and corporate debt?
As the marginal source of buying and selling pressure in many global markets, the now $2.5 Trillion hedge fund industry will undoubtedly set the tone. If the hedge funds get through year-end, they will then have January to contend with. They surely would like to avoid having to de-risk into a June-like backdrop of heavy mutual fund and ETF outflows. The current backdrop would seem to imply the return of unstable markets for some weeks to come.
Doug's weekly missive over at the prudentbear.com Internet site is a must read for me every week. Here is his latest commentary from yesterday evening.
The nemesis of Wall Street’s high-frequency traders operates out of an apartment-sized office above the Bliss Salon -- manicure/pedicure $45 -- on Elm Street in the Chicago suburb of Winnetka.
Staring at four computer monitors, Eric Scott Hunsader, the founder of market-data provider Nanex LLC, looks for hints of illicit trading hidden in psychedelic images of triangles dancing with dots that represent quotes to buy and sell U.S. stocks broken down by the millisecond.
Charts of trading produced by Hunsader’s eight-person firm have captivated everyone from regulators to art gallery owners. One stunt involved a computerized piano piece mimicking quotes for an exchange-traded fund. He infuriates some traders, who say Nanex draws unwarranted conclusions and spreads conspiracy theories.
To Hunsader, the images created from market feeds are evidence of high-frequency trading firms exploiting market rules to turn a profit in a lawless environment. Though others in the industry see his reports and charts as propaganda, Nanex’s interpretations are helping to drive the public debate about the fundamental fairness of the modern stock market.
This longish but interesting Bloomberg essay was sent to me last Saturday by reader U.D...and it's the sort of piece that had to wait for a spot in a Saturday column. It was posted on their Internet site twelve days ago.
Billions of dollars annually are being used to fund operations conducted by the United States intelligence community, the likes of which allow the government to eavesdrop on emails, listen to world leaders’ phone calls and about everything in-between.
One thing that budget hasn’t bought, however, is subtlety. The US National Reconnaissance Office launched a top-secret surveillance satellite into space Thursday evening, and the official emblem for the spy agency’s latest mission is, well, certainly accurate, to say the least.
The latest spy satellite to be sent into orbit by the NRO can be recognized by its seal: a malevolent octopus with furrowed brows that also happens to be wrapping its tentacles around all corners of the Earth.
This Russian Today story, filed from Moscow early Friday evening, was sent to me by South African reader B.V...and even if you don't read it, you should at least look at the picture so you can see the mindset of the psychopaths running the NRO.
Italian communications have been targeted through the US’s Special Collection Service sites in Rome and Milan, according to Italy’s l’Espresso. The same service allegedly tapped into German Chancellor Angela Merkel’s cellphone.
The new leak, revealed by Glenn Greenwald with l’Espresso, alleges that the National Security Agency subjected Italy’s leadership to surveillance, although not specifying which people within the country’s “leadership” were monitored, via US diplomatic missions in Rome and Milan. The spying went on from 1988 to at least 2010.
The NSA conducted snooping in Italy via its Special Collection Service, which came under scrutiny after the snooping scandal involving Chancellor Angela Merkel. The report on Friday reveals the service kept whole two sites running in Italy: one in Milan, the country’s main economic hub, and one in Rome (staffed with agents). Of all European nations, only Italy and Germany had two SCS sites working simultaneously, according to the leak.
Here's another story from the Russia Today website. This one was posted late Friday afternoon Moscow time...and it's the first offering of the day from Roy Stephens.
Former US intelligence contractor Edward Snowden is set to make a pre-recorded video appearance at the European Parliament’s civil liberties committee around 18 December.
“The meeting will be live-streamed but the statement will be recorded answers of our questions, which will we send in advance,” said German Green MEP Jan Phillip Albrecht on Friday (6 December).
Albrecht noted that a live stream of Snowden himself would risk revealing his location.
The American is currently in Russia where he is said to be working at the country's version of Facebook, VKontakte.
This news item, filed from Brussels, showed up on the euobserver.com Internet site on Friday afternoon Europe time...and it's the second offering in a row from Roy Stephens.
Ukraine's President Viktor Yanukovych and his Russian counterpart Vladimir Putin have held surprise talks on a "strategic partnership treaty".
Mr Yanukovych flew from China to Sochi in southern Russia for the meeting. He also cancelled a visit to Malta.
Last month he shelved a partnership deal with the EU, triggering angry protests in Ukraine's capital Kiev.
This short article put in an appearance on the bbc.co.uk Internet site late Friday morning GMT...and it's another contribution from reader B.V.
Much has been said about the defeat the European Union suffered with Ukraine’s sudden refusal to sign a trade and association agreement. The contrary is true: The EU has had a lucky escape and so have the Ukrainian people.
Ukraine has a dysfunctional economy that faces imminent default. It cannot afford another destabilizing revolution. Rather than make a grand geostrategic choice between East and West, the country needs round-table talks similar to the ones that helped bring about a peaceful end to communism in Poland in 1989. These negotiations should resolve Ukraine’s political logjam and reach agreement on reforms to resuscitate the economy.
The to-do list for Ukraine has been known for a long time: a functioning democracy and a market economy with firm and transparent rules. Yet there has been no political will to take the steps required, because doing so would endanger the vested interests of too many of Ukraine’s political leaders and business leaders. Short of a miracle, Ukraine will continue muddling its way down.
This opinion piece by Finnish professor Pekka Sutela was posted on the Bloomberg website yesterday morning Denver time. I consider it a must read for all students of the New Great Game. It's the third offering of the day from Roy Stephens, for which I thank him.
When the United Nations Climate Change Conference wrapped up in Warsaw the weekend before last, it did, despite what most observers and disappointed NGO representatives believe, yield a result. It just wasn't officially announced: the termination of the at-least symbolic general agreement that urgent action must be taken to counter global warming. In other words, climate change has been definitively removed from the global policy agenda.
The intense concern over climate change triggered by Intergovernmental Panel on Climate Change reports in 2007 and widely popularized by Al Gore's movie, "An Inconvenient Truth" -- a concern that led even Angela Merkel to make an appearance in the Arctic as the "climate chancellor," decked out in a red all-weather jacket -- actually dissipated a while ago, but no one wanted to say so out loud.
This issue has finally gone away, at least for the moment. It was all b.s. right from the beginning, and I said so. In case you've forgotten, dear reader, I spent seven years in Canada's high arctic with Environment Canada about forty-odd years ago, and I still have good connections inside the service today. This is an issue with which I am intimately familiar, and it's nice to see it given the burial it has long deserved.
I'm not sure whether the whole article is worth reading or not, as I don't really agree with the rest of what the author has to say, but the two paragraphs I cut and paste above made this spiegel.de essay worth posting. This is another contribution from Roy Stephens for which I thank him.
On a dusty parade ground outside Tripoli, young recruits march and bark out slogans for the new Libyan army that Western powers hope can turn the tide on militias threatening to engulf the North African country in anarchy.
Their boots are new and their fatigues pressed, but Libya's army recruits will need more than drills to take on the hardened militiamen, Islamist fighters and political rivalries testing their OPEC nation's stability.
Two years after NATO missiles helped rebels drive out Muammar Gaddafi, Libya is under siege from former rebel fighters who now flex their military muscle to make demands on the state, seize oilfields and squabble over post-war spoils.
U.S.-sponsored regime changes are always messy affairs, and this one is proving no exception. This Reuters story, filed from Tripoli, was posted on their Internet site in the wee hours of Thursday morning EST...and it's a worthwhile read for all students of the New Great Game. It's also another offering from Roy Stephens.
NATO chief Anders Fogh Rasmussen has joined the US in urging Afghan President Hamid Karzai to sign a security agreement with Washington by year’s end. Karzai has so far been reluctant to sign the deal, which would grant US troops legal immunity.
Rasmussen said that ratifying the Afghan-US bilateral security agreement was an indispensable condition for NATO’s multinational International Security Assistance Force (ISAF) to continue its military mission in Afghanistan beyond 2014.
“Let me be very clear: It is a prerequisite for our presence in Afghanistan beyond 2014 that an appropriate legal framework is in place,” Rasmussen told reporters at a briefing at NATO headquarters in Brussels.
Without the deal “it will not be possible to deploy a train, advise, assist the mission to Afghanistan after 2014,” Rasmussen said. NATO previously announced plans to leave up to 12,000 soldiers in Afghanistan on a training mission after 2014.
This is another story from the Russia Today website. This one was posted there very early on Tuesday afternoon Moscow time, and had to wait for a spot in today's column. I thank reader B.V. for sending it our way.
Nearing the tail end of his Asian tour on Friday, Vice President Joe Biden set in stone the United States’ stance on a budding conflict there regarding ownership of airspace in the East China Sea.
Amid growing tensions in the region, Mr. Biden said during a stop in Seoul, South Korea this week that the US wholeheartedly rejects China’s self-declared right to control airspace above the Diaoyu islands — a small section of the sea off Taiwan’s northern coast which has recently attracted international tension due to a row that’s erupted between regional powers.
Speaking at Yonsei University on Friday, Biden said, according to Reuters, "I was absolutely clear on behalf of my president: We do not recognize the zone. It will have no effect on American operations. None. Zero.”
This news item was also posted on the Russia Today website late yesterday afternoon Moscow time...and it's the final offering of the day from reader B.V.
China is taking the highly unusual step of refusing to participate in a United Nations arbitration process over a territorial conflict with the Philippines, one of five countries challenging Beijing’s claims of ownership over the oil-rich South China Sea.
The legal dispute underscores the tough geopolitical approach China is adopting in the Pacific region. It has adopted an aggressive approach toward neighbours over a 2,000-mile stretch that also includes the East China Sea, over which it recently declared the air defence identification zone that has inflamed tensions with Japan and South Korea.
China sent its only aircraft carrier to the disputed waters off the coast of the Philippines for the first time last week, in a move Manila said raised tensions. China’s military said the carrier Liaoning will conduct drills in the area, accompanied by two destroyers and two frigates.
This story appeared on theguardian.com Internet site early yesterday evening GMT...and is the final offering of the day from Roy Stephens, for which I thank him.
1. Eric Sprott: "Terrifying Threat to the Financial System". 2. Tom Fitzpatrick: "2 Fantastic Charts Show Why Gold May Quickly Surge $200". 3. Bill Fleckenstein: "Global Meltdown and Why Bitcoin Will Go to Zero". 4. Egon von Greyerz: "The Frightening Problems Facing the U.S. and the World".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
It wouldn't be a non-farm-payrolls (or for that matter any government report) without the ubiquitous "early" move in precious metals before the report is given to the general public. As Nanex shows, Gold's price moved in a 'correct' downward (taper-on) way on the "good" news that jobs are 'improving' 7 seconds before the report hit...
That's all there is to this short Zero Hedge piece from yesterday morning, but the charts are worth a look. I thank Manitoba reader Ulrike Marx for sharing it with us.
Sprott Money News interviewed Sprott Asset Management CEO Eric Sprott yesterday about the unfunded liabilities that sent Detroit into bankruptcy...and that means that the U.S. government is essentially insolvent, and then interviewed Chris Powell about the comparative advantages of bitcoin and gold. The audio clip is ten minutes long...and is posted on the soundcloud.com Internet site. I found this in a GATA release yesterday evening.
Turkey’s gold imports have surged to their highest on record so far this year after a hefty drop in bullion prices, with further progress signposted if restrictions on trade with Iran are formally eased.
Turkey imported 270.7 tonnes of gold in the first 11 months of the year, data from Borsa Istanbul showed, more than double 2012’s full-year imports of 120.8 tonnes.
The rise stemmed chiefly from this year’s sharp drop in gold prices, which have fallen 26 percent since December 2012 after 12 straight years of gains.
“Turkey, like most of the price-sensitive markets, saw this year’s lower price level as an opportunity to replenish stocks and release some of the pent-up demand that has been building as consumers have been priced out of the market,” Cameron Alexander, an analyst with Thomson Reuters GFMS, said.
This short story, co-filed from London and Ankara, was posted on thepeninsulaqatar.com Internet site very early yesterday morning in Qatar. My thanks go out to Ulrike Marx for digging up this story on such an obscure website. It's definitely worth your while.
Writing for Chris Martenson's Peak Prosperity Internet site, economist and former banker Alasdair Macleod has produced a masterful history of the geo-politics of gold over the last four decades, much of which involves the policy of price suppression adopted by Western central banks and implemented through the expansion of "paper gold" by their agents, the bullion banks.
Macleod deduces that since their smashing of the gold market in April, Western central banks have been supplying much metal surreptitiously to hold the price down. From import and official reserve data he calculates that the Western central banks have little metal left and that their control of the gold market is nearly at an end.
Macleod's commentary is pretty much a state paper for the gold community and is not to be missed. It is titled "There Is Too Little Gold in the West -- The History of Gold's Flight to the Developing World".
This is another news item I found in a GATA release yesterday...and it's definitely worth reading.
Today, anyone who talks about hyperinflation is treated like the shepherd boy who cried wolf. When the wolf actually does show up, though, belated warnings will do little to keep the flock safe.
The current Federal Reserve strategy is apparently to wait for significant price inflation to show up in the consumer price index before tapering. Yet history tells us that you treat inflation like a sunburn. You don’t wait for your skin to turn red to take action. You protect yourself before leaving home. Once inflation really picks up steam, it becomes almost impossible to control as the politics and economics of the situation combine to make the urge to print irresistible.
The hyperinflation of 1790s France illustrates one way in which inflationary monetary policy becomes unmanageable in an environment of economic stagnation and debt, and in the face of special interests who benefit from, and demand, easy money.
Even though it's not about precious metals directly, this short essay falls into the absolute must read category...and it was posted on the mises.org Internet site on Tuesday...and I thank Dr. David Richardson for today's last story.
As we reported earlier, while on the surface the headline revised Q3 GDP number was a stunner coming at 3.6%, the reality is that more than 100% of the growth from the initial estimate came from a revised estimate of how many private Inventories were stockpiled in the quarter. The reality was that of the $230 billion in total increase in SAAR GDP, $146 billion of this, or over 63%, was due to inventory stockpiling.
But where the scramble to accumulate inventory in hopes that it will be sold, profitably, sooner or later to buyers either domestic or foreign, is seen most vividly, is in the data from the past 4 quarters, or the trailing year starting in Q3 2012 and ending with the just released revised Q3 2013 number. The result is that of the $534 billion rise in nominal GDP in the past year, a whopping 56% of this is due to nothing else but inventory hoarding.
The problem with inventory hoarding, however, is that at some point it will have to be "un-hoarded." Which is why I expect many downward revisions to future GDP as this inventory overhang has to be de-stocked.
That's about all there is to this Zero Hedge story from yesterday, but the embedded charts are definitely worth your time...and I thank Manitoba reader Ulrike Marx for today's first news item.
Treasury Secretary Jacob J. Lew will assert on Thursday that the Obama administration’s vast overhaul of the financial system is close to accomplishing its goal of shielding society from the dangers posed by giant banks.
In a broad policy speech intended to signal the administration’s views on financial regulations, Mr. Lew will also make it clear that more measures may be needed to strengthen the global system. In comments that will most likely upset foreign governments, he will call on overseas regulators to make their rules tougher.
Earlier this year, I said if we could not with a straight face say we ended ‘too big to fail,’ we would have to look at other options,” he says. “Based on the totality of reforms we are putting in place, I believe we will meet that test, but to be clear, there is no precise point at which you can prove with certainty that we have done enough.”
Mr. Lew’s comments come as regulators are scheduled to meet next week to finally approve the Volcker Rule, a cornerstone of the overhaul that tries to stop banks from speculatively trading with depositors’ money and other funds. In recent months, the Treasury Department has pressed the five agencies that worked on the rule to finish it before the end of the year.
This article was posted on The New York Times website two minutes after midnight on Thursday morning in New York...and I thank Phil Barlett for finding it for us. It's worth reading.
As we have been covering for the past year and a half, most explicitly in "A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed", when it comes to the pathway of the Fed's excess deposits propping up risk levels, it has nothing to do with reserves sitting on bank balance sheets as assets, and everything to do with excess deposits (of which there are now $2.4 trillion thanks to the Fed) which are used as Initial collateral by banks such as JPM and then funding such derivatives as IG9 in a failed attempt to cover a segment of the corporate bond market. These deposits originate at the Fed as a liability at the commercial banking sector to the excess reserve asset.
That much is clear and undisputed, and was admitted by none other than JPM itself.
Which is why the news overnight from the WSJ that the Volcker Rule (if and when it is implemented) will do away with such "portfolio hedging" trades may have truly major, and potentially very risk adverse, consequences.
The WSJ reports: "In a defeat for Wall Street, the "Volcker rule" won't allow banks to enter trades designed to protect against losses held in a broad portfolio of assets, according to people familiar with the rule. The practice, known as portfolio hedging, has become a focal point of regulators drafting the rule, a controversial plank of the 2010 Dodd-Frank financial law that seeks to prevent banks from putting their own capital at risk in pursuit of trading profits.
But it won't contain language permitting portfolio hedging, which has been "expunged" from earlier drafts of the rule, according to a person familiar with the matter. Regulators decided to remove portfolio hedging from the rule after J.P. Morgan Chase disclosed billions of dollars in losses from its so-called London whale trades in 2012."
This Zero Hedge piece from yesterday is a bit of heavy reading, but is definitely worth your time if you have it. It's the second offering of the day from Ulrike Marx.
Three Wall Street trade groups sued the U.S. Commodity Futures Trading Commission on Wednesday to stop tough overseas trading guidelines that they fear could hurt markets and reduce their profits.
The groups accused the CFTC in their lawsuit of circumventing a more rigorous rule making process by issuing its cross-border regulations as "guidance.'
They also said they filed the lawsuit to stop the CFTC from what they described as an "unceasing effort'' to regulate the global swaps market through unpredictable advisory documents instead of formal rules.
This short article, along with an embedded 43 second video clip was posted on the cnbc.com Internet site on Wednesday shortly after the markets closed...and I thank West Virginia reader Elliot Simon for sending it our way.
It wasn't long after three former General Electric Co. executives were convicted of rigging auctions for municipal-bond investment contracts that they received the ultimate sendoff: A 7,400-word torching in Rolling Stone magazine by Matt Taibbi, the writer who branded Goldman Sachs Group Inc. with the nickname "vampire squid."
"Someday, it will go down in history as the first trial of the modern American mafia," Taibbi began his June 2012 opus about Dominick Carollo, Steven Goldberg and Peter Grimm. "Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street."
Then came a surprise last week, right before Thanksgiving. A federal judge ordered the men released from prison. An appeals court had reversed their convictions the day before, without explanation. An opinion would be issued "in due course," it said. Bloomberg News ran a short story this week. The rest of the news media barely noticed.
This rather short op-ed piece by Jonathan was posted on the Bloomberg website yesterday morning...and is definitely worth skimming. I thank Washington state reader S.A. for sending it along.
"There are going to be consequences to central bank balance sheet expansion all over the world," Kyle Bass tells Steven Drobny in his new book, The New House of Money, adding "It’s a beggar-thy-neighbor policy, but everyone is beggaring thy neighbor." The Texan remains concerned at QE's effects on wealth inequality and worries that "at some point this is going to ignite and set cost pressures off." While Gold-in-JPY is his recommended trade for non-clients, his hugely convex trades on Japan's eventual collapse remain as he explains the endgame for his thesis, "won't buy back until JPY is at 350," and fears "the logical conclusion is war."
This commentary by Kyle is embedded in another Zero Hedge story...and this one was filed on their website late yesterday afternoon EST. I thank Ulrike Marx for sending this one our way as well.
The National Security Agency and its allies face a long, painful drip of classified documents relating to their intelligence operations.
The quantity and range of leaks facilitated by Edward Snowden have become clear in recent news stories.
First, The Australian reports that Edward Snowden stole as many as 20,000 Aussie signals intelligence files from the NSA's systems. Australia's attorney general called the disclosures the most damaging in the country's history.
This news item was posted on the businessinsider.com Internet site yesterday morning EST...and I thank Roy Stephens for his first offering of the day.
The Channel is getting ever wider. While George Osborne plans to push Britain's retirement age to 70, Europe's big two are going the other way.
The German coalition deal has pencilled in a cut in the retirement age from 65 to 63, for those who have put in 45 years of contributions. (The overall plan to push the pension age gradually up to 67 remains in place.)
President François Hollande has cut the reversed Nicolas Sarkozy's rise in the retirement age to 62 in France. Workers with 41 years of contributions can now retire at 60.
This Ambrose Evans-Pritchard blog was posted on the telegraph.co.uk Internet site yesterday sometime...and it's the second contribution in a row from Roy Stephens.
France's unemployment rate rose to a 16-year high of 10.9 percent in the three months to September, the INSEE national statistics agency said Thursday, adding to pressure on President Francois Hollande in his battle to tackle France’s unemployment.
The jobless rate rose 0.1 percentage points from the previous three months, the new data showed.
The unemployment rate for metropolitan France, which excludes overseas territories and is more closely watched domestically, also rose by 0.1 percentage point in the same period to 10.5 percent.
This story appeared on the france24.com Internet site yesterday sometime...and I thank Roy Stephens for sliding this into my in-box in the wee hours of this morning.
Europe is one shock away from a deflation trap. A surprise anywhere in the world is all that it needs: an upset in China as the credit bubble pops, or a global bond shock as the US Federal Reserve winds down monetary stimulus.
Producer price inflation (PPI) fell to -1.4pc in the eurozone in October. This is how deflation becomes lodged in the price chain.
"Prices are sticky for a while as you approach zero inflation, but once you break through the ice into deflation things can move fast, as we've seen in Greece," said Julian Callow, global strategist at Barclays. "The European Central Bank needs to act before the horse has already bolted."
This longish commentary is also by Ambrose Evans-Pritchard...and it's definitely worth reading. It was posted on The Telegraph website late Wednesday evening GMT...and it's another offering from Roy Stephens.
From Mario Drahgi's perspective, the euro zone has already been split for some time. When the head of the powerful European Central Bank looks at the credit markets within the currency union, he sees two worlds. In one of those worlds, the one in which Germany primarily resides, companies and consumers are able to get credit more cheaply and easily than ever before. In the other, mainly Southern European world, it is extremely difficult for small and medium-sized businesses to get affordable loans. Fears are too high among banks that the debtors will default.
For Draghi and many of his colleagues on the ECB Governing Council, this dichotomy is a nightmare. They want to do everything in their power to make sure that companies in the debt-plagued countries also have access to affordable loans -- and thus can bring new growth to the ailing economies.
The only problem is that all those low interest rates have so far barely been put to use. Lending to companies in the euro zone is still in decline. In October, banks granted 2.1 percent less credit to companies and households than in the same period last year.
In addition to a further cut in interest rates to zero percent, the central bankers are considering new, drastic measures to combat the negative trend. Some of them are likely to be hotly debated when the Governing Council meets this Thursday in Frankfurt.
This must read article was posted on the German website spiegel.de early yesterday afternoon Europe time...and it's courtesy of Roy Stephens once again.
Mario Draghi said the ECB is studying what happened in Japan at the onset of its Lost Decade in the 1990s, insisting that Europe is unlikely to go the same way.
The European Central Bank has cut its inflation forecast for the next two years and promised “powerful artillery” to boost the eurozone economy if necessary, but offered no concrete measures to halt the drift towards deflation.
The euro punched to a five-week high of nearly $1.37 against the dollar and £0.84 against the pound as traders bet that the ECB’s governing council is too divided to take decisive action. Yields on 10-year Italian and Spanish bonds jumped seven basis points as credit tightened across the board.
This is another offering from Ambrose Evans-Pritchard. This story was posted on the telegraph.co.uk Internet site very late yesterday afternoon GMT...and is the final contribution of the day from Roy Stephens.
Russia voiced outrage Friday at charges in the United States against 49 current and former Russian diplomats and their wives over a $1.5 million fraud, saying it could not understand why the US had gone public with the allegations.
Deputy Foreign Minister Sergei Ryabkov said in a statement to Russian news agencies that Moscow had many claims against the behaviour of US diplomats in Moscow but had preferred not to bring them into the public sphere.
"We categorically reject the charges against the staff of Russian diplomatic institutions in the United States," he was quoted as saying by the ITAR-TASS news agency, saying it was "illegal" for diplomats to have been watched by the authorities in this way.
This AFP news item was posted on the france24.com Internet site early this morning Paris time...and I thank South African reader B.V. for sending it our way earlier this morning. It's certainly a must read for all students of the New Great Game.
1. Pierre Lassonde: "This Will Trigger Next Leg of the Gold Bull Market". 2. Dr. Stephen Leeb: "China Mining Some Gold for a Staggering $2,500 an Ounce". 3. John Ing: "Shanghai Exchange Has Delivered More Gold Than Fort Knox!".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
The London Metal Exchange (LME) faces a tough job as it gears up to provide more data about long and short positions, including delivering what many investors crave - information on flows of speculative money that move markets.
The LME, the world's biggest and oldest marketplace for industrial metals, has launched consultations after last month promising to boost transparency at the same time it announced new proposals to cut backlogs at warehouses.
The exchange, owned by Hong Kong Exchanges and Clearing Ltd, is in a two-track process to provide detailed reports on positioning in metals futures as well as more data on warehouse inventories.
This Reuters story found a home over at the mineweb.com Internet site yesterday...and it's another contribution from Ulrike Marx.
Deutsche Bank AG pulled the plug on its global commodities trading business on Thursday, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.
Germany's largest bank, which was one of the top-five financial players in commodities, said in a statement it will cease trading in energy, agriculture, base metals, coal and iron ore, retaining only precious metals and a limited number of financial derivatives traders.
The cuts are expected to largely fall on its main commodity desks in London and New York.
One has to wonder whether the Dodd-Frank regulations will still allow precious metal trading by the big U.S. banks once its passed next week. It sure wouldn't surprise me if JPMorgan Chase, HSBC USA and Citigroup were allowed to keep trading the monetary metals. We'll find out soon enough, I suppose. I found this Reuters story in a GATA release yesterday.
This 22-minute audio interview with Marc was done by Patrick MonesDeOca...and was posted over at the Equity Management Academy website about ten days ago. I haven't had the time to listen to the whole thing, but the parts I did hear were mostly precious metals related...and is the reason that this interview is posted in the precious metals section of the Critical Reads. I thank reader Ken Hurt for digging it up for us.
Is gold still in a bull market or a bear market? Opinions differ but in reality the answer to both questions could well be yes. It all depends where you start from! Over 12 years gold has risen from $250 to around $1,230 at the time of writing – definitely a bull market then? Over the past two and a bit years gold has fallen from around $1,900 to $1,220. That looks as though it may be a bear market then? Well yes – or is this just a major correction in a secular bull market? To an extent it depends on whether you are a gold bull or a gold bear as to which viewpoint you take.
It was thus interesting to listen to some of the views expressed at the Mines & Money conference in London which has just ended. Speakers were perhaps more biased to the major correction in an ongoing bull market angle and they certainly had some strong historical evidence to support their viewpoints. Whether history will again repeat itself is obviously the major question here, but it does have the uncanny ability to repeat itself and one suspects it will do so yet again with the markets and gold – the only real question being how much further will gold fall before the market turns, and then how far and fast it will rise when it does.
The question of "how far and fast" should be directed to JPMorgan Chase and two other U.S. bullion banks, as they are totally in command of the precious metal pricing structure in the Comex futures market...and until they say so, or are instructed to step aside, this price management scheme will continue unless the physical market dictates otherwise. This commentary by Lawrence was posted on the mineweb.com Internet site yesterday...and once again I thank Ulrike Marx for bringing this article to our attention. It's worth the read.
The world's most valuable jewellery retailer Chow Tai Fook, which counts Cartier and Tiffany & Co as competitors, is on a quest to conquer the hearts of China's future big spenders. Its weapons of choice: Hello Kitty and Winnie the Pooh.
Superman and the Angry Birds team also feature in Chow Tai Fook Jewellery Group's range of fashionable, and affordable, pieces which the company hopes will win over the millions of Chinese who live outside major cities but who are reaping the benefits of a rapidly growing economy and who remain enamoured by the gleam of gold.
Chow Tai Fook's fashion jewellery, which costs between HK$200 and HK$2,000 ($26 and $260), is a far cry from the luxury offerings that have traditionally accounted for over 80 percent of sales, and which on average cost about 10 times as much.
But the shift to expand mass-market retail is already paying off. Chow Tai Fook saw its net profit rise by a forecast-beating 92.3 percent in the six months ended September, with same-store sales growing 33.2 percent.
Between the time I read this Reuters story yesterday afternoon...and then got around to posting in today's column at 3:02 a.m. EST this morning, the original link had become inactive. I did a Google search of the headline, and it's obviously had a "Page 1 rewrite" in the interim. That's what you're seeing here, and I have no idea what changes were made between the two stories. I thank Ulrike Marx for her final contribution to today's column.
It has been a difficult year for silver investors with the metal falling by 36% year-to-date. While the Federal Reserve balance sheet continues to expand, ‘taper’ discussions by the Federal Open Market Committee have weighed heavily on the price performance of all the precious metals this year. By our calculations, over the last five years silver has a beta to the gold price of 1.5. This implies that price changes in gold are magnified in silver. Combine this with an 80% correlation in the price action between gold and silver over the same time frame and it’s easy to see that where the price of gold goes, the price of silver goes faster. As we break down the fundamentals for silver, market developments this year give rise to a curious conundrum – how can the case for silver be stronger while the price continues to languish?
Sprott's David Franklin, the author of this report, concludes his comments with this sentence..."The most curious part of this fundamental case for silver is why the price isn’t higher." David knows perfectly well why, as does everyone at Sprott, and that's because JPMorgan et al are sitting on the price. This commentary was posted on the sprottglobal.com Internet site yesterday...and it's definitely worth reading.
Interviewed by GATA consultant Koos Jansen, Anglo Far-East Bullion Co.'s Alex Stanczyk discusses his recent trip to a Swiss gold refinery whose managing director told of an unprecedented shortage of metal as China consumes it all.
The interview is headlined "Alex Stanczyk: Physical Supply Has Never Been Tighter" and it's posted on the Swiss Internet site ingoldwetrust.ch...and it's an absolute must read and today's most important story. I found it posted on the gata.org Internet site early yesterday morning.
"Eventually, the whole world is going to collapse," Jim Rogers chides a disquieted CBC anchor as he explains the reality that, "we in the West have staggering debts. The United States is the largest debtor nation in the history of the world," adding that "this is going to end badly."
However, the co-founder of Soros' Quantum fund is convinced that the commodity super-cycle is far from over, but driven by supply constraints (and cost increases) as opposed to demand from higher growth. The following interview provides more color on his commodity view as he re-iterates his bullish stance on Ag (with sugar a focus) and Natural Gas (some harsh natural realities coming), warning "don't get too excited about fracking," when he talks energy products.
Rogers, in his inimitable way, sums up the state of euphoria that many markets find themselves in thus, "we are all floating around on a sea of artificial liquidity right now. This is not going to last."
The 7:23 minute CBC News video clip is embedded at the end of this Zero Hedge article...and my thanks go out to Manitoba reader Ulrike Marx for today's first story.
Anyone in a public-sector job looking forward to retiring in comfort should look carefully at what is going on in Detroit and Springfield, Ill. Sherlock Holmes would call it the case of the missing pension money.
News leaking out this week from the Motor City tells how the enormous gap between the pensions workers earned and the money set aside to pay for them will be closed. By stealing from the workers.
Courts, legislatures, and corporations are all working in concert not to pay the full benefits owed. For decades, political and business leaders failed to set aside the right amount of money each payday to cover the pensions workers earned and, in some cases, covered up the mismanagement of pension fund investments.
This short Newsweek essay was posted on their website sometime yesterday...and I thank Washington state reader S.A. for sending it our way.
Protecting investors and ensuring proper corporate governance are the essence of the mission of the Securities and Exchange Commission. But you wouldn’t know that from the recent actions of the agency and its chairwoman, Mary Jo White.
Last week, the S.E.C. unwisely removed from its regulatory agenda a plan to consider a rule to require public companies to disclose their political spending — even though the case for disclosure is undeniable. Basic investor protection requires that shareholders know how corporate executives are spending shareholder money. Good corporate governance requires that companies are transparent about their use of corporate resources. Shareholders know this and have demanded disclosure.
Even before 2010, when the Supreme Court’s ruling in Citizens United opened the floodgates for corporate political spending, shareholder proposals requesting information on such spending were growing. Since the ruling, those requests have increased along with the political spending. Trade associations and politically active tax-exempt groups are not required to disclose their donors, but there is mounting evidence that much of the money they spend is from companies that want to influence elections in secret, without fear of alienating shareholders, customers or legislators they target for defeat.
This short editorial was posted on The New York Times website on Tuesday...and thanks go out to Phil Barlett for sharing it with us.
At least 130 people were injured and one killed following mass looting and vandalism by gangs of youths, who took over several parts of Cordoba City in Argentina. The lawlessness was a result of the police going on strike over low pay.
A young man around 20 years old has died from a gunshot wound to his chest, imneuquen.com.ar reports. More than 50 people who took part in the looting have been detained. Twelve of the 130 who were wounded sustained their injuries from firearms.
After the news of the strike broke Tuesday, looters quickly appeared in the streets, going primarily for the supermarkets and small stores, which rapidly shut their doors. Targets included clothing stores, sporting goods, toy stores, bike shops, and branches of cell phone companies. Local media termed the city 'virtually paralyzed'.
This news item was posted on the Russia Today website early yesterday afternoon Moscow time, which was 6 a.m. in New York. It's the first contribution of the day from Roy Stephens.
Demonstrating a new resolve to punish bank misconduct, the European Union fined a group of global financial institutions a combined €1.7 billion (US$2.3 billion) on Wednesday to settle charges that they colluded to fix benchmark interest rates.
The settlement was the largest combined penalty ever levied by the European competition authorities and is the first time that American banks have been fined in a set of interest rate scandals that have also drawn scrutiny from regulators in Britain and United States. Those regulators still have their own investigations underway.
“By European standards, it’s a large fine,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It signals that the time when only the U.S. can impose big fines is probably over.”
This New York Times news item was posted on their Internet site early yesterday morning EST...and I found it embedded in a GATA release.
Subprime mortgages, currency tricks, interest rate fixing: Wherever supervisory authorities have probed crooked deals of the past, Deutsche Bank comes up. Now Germany's biggest bank has had to pay its first big fine. It won't be the last.
The statement had already been prepared: "We are attaching the highest institutional importance to ensuring that this type of misconduct does not happen again," the chief executives of Deutsche Bank, Anshu Jain and Jürgen Fitschen, said in a statement shortly before midday on Wednesday. Minutes earlier, the European Commission in Brussels had slapped record fines totaling €1.7 billion ($2.3 billion) on six international banks. Deutsche Bank's share was the biggest by far at €725 million.
It's the first major fine Deutsche Bank has has to pay for its past sins, and it's unlikely to be the last. The bank is embroiled in many lawsuits around the world, most of them related to the time before the 2008 financial crisis.
Several US authorities are targeting the perpetrators of the financial crisis -- banks that bundled and sold the controversial mortgage-backed securities from home loans. JP Morgan Chase alone has to pay $13 billion. Deutsche Bank faces possible claims running into billions of dollars.
It certainly sounds like Deutsche Bank is the German equivalent of JPMorgan Chase. This story was posted on the German website spiegel.de early yesterday evening Europe time...and it's worth reading. It's the second offering of the day from Roy Stephens.
The top editor of the British newspaper The Guardian told Parliament on Tuesday that since it obtained documents on government surveillance from a former National Security Agency contractor, Edward J. Snowden, it has met with government agencies in Britain and the United States more than 100 times and has been subjected to measures “designed to intimidate.”
The testimony by the editor, Alan Rusbridger, gave a public airing to the debate over how to balance press freedom against national security concerns, an issue that became more acute once The Guardian began publishing material leaked by Mr. Snowden in June.
The American and British governments have said the disclosures, which detail how the National Security Agency and its equivalent in Britain, Government Communication Headquarters, gather vast amounts of data, damage national security and help hostile governments. Journalists and transparency advocates have countered that the leak spurred a vital debate on privacy and the role of spy agencies in the Internet age.
This news item from The New York Times on Tuesday is definitely worth reading...and is another contribution from Roy Stephens.
One day after he spoke with leaders in embattled neighbor Japan, Vice President Joe Biden met with officials in China on Wednesday amid an escalating argument between Asian nations that has attracted the attention of the United States.
A meeting between Biden and China’s President Xi Jinping scheduled for only 45 minutes this week turned into a two hour ordeal and ended with the US senator-turned-second-in-command offering brief remarks but answering no questions before a press scrum in Beijing.
When Biden finally emerged from his marathon meeting with President Xi on Wednesday, he appeared “solemn” and “weary-sounding,” according to the New York Times’ Mark Lander, and the Associated Press equated the meeting between men as an “awkward kickoff” for the vice president’s tour of China.
Instead of directly acknowledging the disagreement between China and Japan during the press conference that followed his meeting, Biden said both nations need to make use of "crisis management mechanisms and effective channels of communication” and spoke of a "new model of major country cooperation” that rests on trust.
This article appeared on the Russia Today website late yesterday afternoon Moscow time...and I thank Roy Stephens once again for sending it our way.
Japan’s salaries extended the longest tumble since 2010, increasing pressure on household finances as inflation begins to take root.
Regular wages excluding overtime and bonuses fell 0.4 percent in October from a year earlier, a 17th straight monthly decline, according to labor ministry data released today. Total cash earnings rose 0.1 percent.
The slide in wages threatens living standards as consumers face the prospect of sustained inflation on top of a sales-tax increase in April next year. As a weaker yen helps boost company profits, the focus is turning to salary talks early next year that may determine the success of Prime Minister Shinzo Abe’s bid to reflate the world’s third-largest economy.
This Bloomberg story, filed from Tokyo, was posted on their website just before midnight on Monday evening Denver time. I found it embedded in yesterday's edition of the King Report.
Australia will dive further ‘Down Under’ into debt, as lawmakers reached a deal to do away with a limit. The government can now borrow as much as it wants, and will avoid a shutdown when it reaches the AU$300 billion debt limit on December 12.
In the first nine months of 2013, Australia’s economy expanded slower than forecast, growing only 0.6 percent from the first six months. Growth in 2012 was 2.3 percent, below the anticipated 2.5 percent benchmark set out by economists.
The forecast is gloomy, as unemployment isn’t expected to drop until 2015, a budget deficit over $30 billion is expected for the 2013 fiscal year, and free trade talks with neighbors are breaking down over spy revelations.
This is a Russia Today story that was posted on their Internet site early yesterday afternoon Moscow time, which was very early in the morning in New York. It's the last contribution of the day from Roy Stephens.
1. Investors Intelligence Report: "Stock Market Bears Plunge to Lowest Level in Over 25 Years". 2. Ronald-Peter Stoferle: "This is Why the Price of Gold is Going Ballistic Today". 3. Pierre Lassonde: "This Can Radically Change the Gold Price Overnight". 4. Ron Rosen: "History is About to Repeat...and it Will Shock the World". 5. The audio interview is with Grant Williams.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
Nick Giambruno: Jim, can you give us a summary of the health of the petrodollar in the past, what it looks like now, and what you think it will look like going forward? What is the significance of all this for the dollar's role as the world's premier reserve currency, the international monetary system in general, and the nominal price of gold?
Jim Rickards: The term "petrodollar" is shorthand for an understanding between Saudi Arabia and the United States that the US will guarantee the security of the House of Saud in return for the Saudis agreeing to price oil in dollars, to manage the dollar price of oil, and to redeposit those dollars in the banking system where they can be used to support international lending by major banks.
This lending, in turn, supports purchases of US and Western manufactured goods and agricultural exports by developing economies. From this deal, the US got cheap energy, exports, banking profits, and the ability to operate a fiat currency system. The Saudis got rich and survived. This system has existed implicitly since 1945 and explicitly since 1974 when it was negotiated by Henry Kissinger on behalf of the Nixon administration.
Now the petrodollar system is collapsing for two reasons. The US has abused its privileged reserve currency position by printing trillions of dollars in an effort to create inflation. More recently, President Obama has taken steps to anoint Iran as the regional hegemon of the Middle East, and to ease the way, in stages, toward Iran's possession of nuclear weapons capability. This is viewed as a stab-in-the-back by the Saudis and the Israelis and will lead quickly to Saudi Arabia obtaining nuclear weapons from Pakistan.
This first rate interview with Jim was posted on the internationalman.com Internet site yesterday...and it's your first absolute must read commentary of the day...especially if you're a serious student of the New Great Game.
Fat chance, you might say. And you would probably be right. For 11 consecutive years the yellow one was worth more (a lot more in some years) on December 31 than it had been the previous January. On January 1 this year trading closed at $US1,678/oz. To get back to that over four weeks would require a market miracle.
While you can still find analysts who believe the gold price will stage a meaningful recovery, there might be quite a different story to tell. Perhaps we should stop being too fixated on price (a suggestion that will fall on deaf ears with every punter reading this) and look instead at demand for physical metal (and leave aside the $US250 billion -- $274.4 billion -- in daily trading of various gold instruments).
This commentary was posted in the clear over at the gata.org Internet site yesterday...and it's worth reading.
Media reports claim the U.S. Mint is sharply limiting American Silver Eagle coin orders for the remainder of this year in order to conserve coin blanks for next year’s 2014 Silver Eagle bullion coin program.
Meanwhile, year-to-date sales of American Eagle gold bullion coins at the end of November totaled 800,500 gold ounces, surpassing last year’s total sales of 753,000 ounces.
Despite sales this year, which have already shattered all-time records, November American Silver Eagle bullion coins sales actually declined by 787,000 coins from October sales. U.S. Mint figures show 2.3 million Silver Eagle bullion coins were sold in November, down from 3,087,000 coins in October and 3,159,500 coins sold in November 2012.
This short story was posted on the mineweb.com Internet site on Tuesday...and I thank reader M.A. for sending it along.
The Royal Canadian Mint's Silver Maple Leaf will be getting a new look in 2014. A new finish formed of complex radial lines and a micro-engraved laser mark will become permanent additions to the Mint's flagship silver bullion coin.
The traditional bullion finish on previous Silver Maple Leaf coins will be replaced with radial lines which emanate from the center of the coin. These lines have been precisely machined within microns on the master tooling to ensure consistent die production and coin striking. The specific width and pitch of the lines create a light diffracting pattern which is unique the "next generation" Silver Maple Leaf and unmatched by other bullion products.
A micro-engraved security mark has also been added to the reverse of the coin. A textured maple leaf incorporates the numeral "14" to denote the coin's year of issue and represents the cutting edge in bullion coin security. This technology was also added to the Mint's Gold Maple Leaf bullion coins starting in 2013, as well as its $1 and $2 circulation coins starting in 2012.
It's about time the silver maple leaf got a face lift, as it was starting to look tired. This very short story contains some neat photos, and is a quick read. It was posted on the coinupdate.com Internet site yesterday...and my thanks go out to West Virginia reader Elliot Simon for finding it for us. By the way, the 25-year anniversary silver maple leafs arrived in our store on Monday...and they are quite smashing! I suggest you pick up some before they disappear.
Reporting from the Mines and Money conference in London, Mineweb's Lawrence Williams quotes the Tocqueville Gold Fund's John Hathaway as attributing gold's recent price decline to the liquidation of paper gold that has been caused by the scramble for real metal.
Hathaway is quoted as predicting an "implosion of credit structures" related to gold, and as asserting that any U.S. gold reserve remaining at Fort Knox is "encumbered by so many lending agreements to banks and their clients that having it there physically is meaningless."
Williams' report is headlined "Paper Implosion Bullish for Gold, Says Tocqueville's John Hathaway" and it was posted on the mineweb.com Internet site yesterday. It falls into the must read category...and I found it embedded in a GATA release, and I thank Chris Powell for wordsmithing "all of the above".
December's "Things That Make You Go Hmmm..." letter by Grant Williams of Vulpes Investment Management in Singapore compares the current mechanisms used by central banks and bullion banks to suppress the gold price with the mechanisms used by the London Gold Pool of the 1960s, which, Williams observed, worked fine every day for a long time until suddenly it didn't.
Williams draws heavily on the long Bloomberg News report from a week ago that raised suspicion about the daily gold price "fixing" undertaken by bullion banks in London, a report called to your attention by GATA.
Williams writes: "The last time an effort was made to manipulate the price of gold lower than the market wanted it to be, it ended in a quick 25 percent spike in the price, followed over the next decade by the manifestation of those market forces in no uncertain terms and ending in a blow-off top some 2,332 percent higher than the price at which gold had been held for two decades.
This is your second absolute must read commentary of the day...and top up your coffee before you start, as it's a bit of a read. It's embedded in a GATA release from yesterday...and it includes an excellent preamble by Chris Powell. There's also a Zero Hedge spin on this story. It's linked here...and is courtesy of Ulrike Marx.
U.S. stocks fell Tuesday, with the S&P 500 and the Dow Jones Industrial Average falling for a third straight day on uncertainty over when the Federal Reserve will begin to scale back stimulus and self-fulfilling fears the market was overdue for a pullback from record levels.
The Dow Jones Industrial Average dropped more than 100 points during the session before settling at 15,914.62, down 94.15 points, or 0.6%, taking it well below the psychologically important 16,000 level. The drop was the index’s biggest one-day decline since Nov. 7.
The S&P 500 lost 5.75 points, or 0.3%, to 1,795.15 and the Nasdaq Composite declined 8.06 points, or 0.2%, to 4,037.20.
“I hate to use the words, ‘we’re due,’ but we’ve gone straight up,” said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.
This news item was posted on the marketwatch.com Internet site just after the markets closed in New York yesterday afternoon...and I thank Roy Stephens for today's first story.
It seems some among the mainstream media believe "the economy is improving." In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which "economy" is improving...
That's all there is to this tiny story, but the chart in this Zero Hedge article from yesterday afternoon is a must to see...and I thank reader M.A. for bringing it to our attention.
What keeps us up at night? Well I can’t speak for the others, having spoken too much already to please PIMCO’s marketing specialists, but I will give you some thoughts about what keeps Mohamed and me up at night. Mohamed, the creator of the “New Normal” characterization of our post-Lehman global economy, now focuses on the possibility of a” T junction” investment future where markets approach a time-uncertain inflection point, and then head either bubbly right or bubble-popping left due to the negative aspects of fiscal and monetary policies in a highly levered world.
Investors are all playing the same dangerous game that depends on a near perpetual policy of cheap financing and artificially low interest rates in a desperate gamble to promote growth. The Fed, the BOJ (certainly), the ECB and the BOE are setting the example for global markets, basically telling investors that they have no alternative than to invest in riskier assets or to lever high quality assets. “You have no other choice,” their policies insinuate. “Get used to negative real interest rates, move out on the risk spectrum and in the process help heal the real economy,” they seem to command.
This commentary was posted on the Zero Hedge website early yesterday morning EST...and my thanks go out to Manitoba reader Ulrike Marx for her first offering in today's column.
Overnight, The Wall Street Journal reported a financial factoid well-known to regular readers: namely that as a result of a broken system that ever since the LTCM bailout has encouraged banks to become take on so much risk they become systematically important (as in their failure would "end capitalism as we know it"), and thus Too Big To Fail, there has been an unprecedented roll-up of existing financial institutions especially among the top, while the smaller, less "relevant", if far more prudent banks have been forced out of business. "The decline in bank numbers, from a peak of more than 18,000, has come almost entirely in the form of exits by banks with less than $100 million in assets, with the bulk occurring between 1984 and 2011. More than 10,000 banks left the industry during that period as a result of mergers, consolidations or failures, FDIC data show. About 17% of the banks collapsed."
The point here is that the number of banks is largely irrelevant: it is obvious that the big will keep on getting bigger, and the Big 5 banks will do all in their power to either acquire their profitable competition or put everyone else out of business. However, the far bigger question is what happens to bank deposits once the Fed start to taper, ends QE or outright unwinds its balance sheet, which ultimately would soak up trillions from bank deposits. Because if there is one thing that is clear is that without the Fed, and without commercial bank loan creation (which has been non-existent in the past 5 years), bank balance sheet would be exactly where they were the day Lehman died.
Finally, one does not need to go any further than the following chart from the OCC [See Table 9, Page 36 for the precious metals. - Ed] showing total bank derivative holdings for all US banks and just the Top 4. The punchline: just the 4 biggest U.S. banks hold $217.5 trillion, or 93% of the total $233.9 trillion in derivatives.
This Zero Hedge piece is worth spending a few minutes on...and I'll have more on the precious metal derivatives in The Wrap. This is the second news item in a row from Ulrike Marx.
As somewhat expected - though hoped against by many Detroit union workers - Judge Steven Rhodes appears to have confirmed Detroit is eligible for bankruptcy protection (after pointing out that the city's accounting was accurate...and it is indeed insolvent) making this the largest ever muni bankruptcy.
The city will now begin working toward its next major move - the submission of a plan to re-adjust its more than $18 billion in debt - including significant haircuts for pension funds and bondholders. With Detroit as precedent, we can only imagine the torrent of other cities in trouble that will be willing to fold.
He did provide an "out" though: Rhodes warns the city that just because pension rights can be impaired, doesn't mean he will approve a plan with steep cuts.
This is another article from Zero Hedge, this one from late yesterday morning EST...and I thank reader M.A. for his second contribution to today's missive. There was also a 2-page story about this in The New York Times yesterday...and it's worth your while as well. It's courtesy of Roy Stephens.
Grant Williams "pulls no punches" in this all-encompassing presentation as the "Things That Make You Go Hmmm" author reflects on what is behind us and looks ahead at the ugly reality that we will face when "the impurities of QE are finally flushed from the system."
Central bankers of today have "changed everything" he chides, "in ways that will ultimately end in disaster." Following extraordinarily easy monetary policies across all of the world's central banks, Williams explains why "we are now near the popping point of the 3rd major bubble of the last 15 years," each bigger than the last.
The only way Janet Yellen avoids being at the helm when this ship goes down is to blow an even bigger bubble than Bernanke's government bond experiment, "which is highly unlikely." From how QE works, why many don't "feel" wealthy anymore, to the fact that "the geniuses that gave this thing life, don't have the guts to kill it," Williams warns, ominously, "the bills have come due on the blissful latest 30 years."
This absolute must watch 32-minute video is another piece from the Zero Hedge website yesterday. Grant's presentation begins at the 2:00 minute mark...and I thank reader Joe Nordgaard for finding it for us.
Households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures.
In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts - the equivalent of around £900 for every household in the country.
It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.
No surprises here, as this is happening in just about every country in the Western world at the moment. This SkyNews story was picked up by the uk.news.yahoo.com Internet site early yesterday morning GMT...and my thanks go out to West Virginia reader Elliot Simon.
The cost of insuring British debt against default has fallen below the levels for the US, Switzerland, Japan and every major eurozone state except Germany, marking a dramatic change of view on UK’s economic prospects.
Credit default swaps (CDS), used for insuring and trading sovereign debt, are “pricing” British bonds as if they were top-notch AAA quality. This comes amid growing speculation that rating agencies may soon shift gears and start to upgrade the UK.
The CDS contracts for the UK have been on a downward trend for months as growth picks up, cutting below countries that still have AAA ratings such as Austria, Australia and Canada.
As you already know, dear reader, computer algorithms and high-frequency trading can set a price/value on anything that they choose to...including affecting credit ratings if necessary. This Ambrose Evans-Pritchard article was posted on the telegraph.co.uk Internet site on Monday evening...and my thanks go out to Roy Stephens once again. It's worth reading.
A committee of MPs challenged the existing system of oversight for the security services by asking the head of MI5 to justify his claims that the Guardian has endangered national security by publishing leaks from the former NSA contractor Edward Snowden.
In an unprecedented step, Keith Vaz, the chairman of the home affairs select committee, announced that spy chief Andrew Parker had been summoned to give evidence in public to the Commons committee next week.
The decision was taken at a private session of the select committee on Tuesday before the body heard evidence from Guardian editor Alan Rusbridger seeking to justify the Guardian's decision to publish a string of stories based on US and UK intelligence agency files leaked by Snowden to the media.
This very interesting news item was posted on The Guardian's website late yesterday evening GMT...and it's another offering from Roy Stephens, for which I thank him.
Ukrainian President Viktor Yanukovych prevented a palace coup against his government on Tuesday. His party managed to see off a vote of no confidence initiated by opposition leader Vitali Klitschko. Yanukovych didn't even bother to show up to the turbulent debate.
When they heard that the opposition had lost the vote of no confidence on Tuesday, thousands of anti-government protestors gathered outside Ukraine's parliament in Kiev vented their anger with deafening chants of "Shame, shame!" They had moved as close to the building as police roadblocks let them. Buses blocked the entrances to parliament, while a large contingent of police cordoned off a wider area.
Inside, the plans of the opposition leadership to force Yanukovych's prime minister, Nikolai Azarov, out of office went up in smoke. A total of 187 MPs voted for the motion of no confidence introduced by the alliance led by boxing world champion Vitali Klitschko. That was nine more than the 178 that had been pledged to the opposition before the vote. Even a member of Yanukovych's ruling Party of Regions voted against the government.
This article was posted on the German website spiegel.de very early yesterday evening Europe time...and it's another contribution from Roy Stephens.
the Netherlands, our close cultural kin.
But before we all flagellate ourselves – let alone think of copying the Shanghai success formula – just remember one thing. There is a body of scholarship showing that the collapse of the fertility rate to dangerously low levels across east Asia is the direct consequence of school cramming and "education fever".
This is well-known to demographers and those who follow the Far East closely, but less known in the West. The CIA World FactBook says fertility rates have fallen to: Hong Kong (1.04%), Singapore (1.10), Taiwan (1.15), Japan (1.20), Korea (1.22%). These figures may be a little too low. Japan and Singapore have seen a small bounce lately.
But the picture is clear enough, and Shanghai is thought to be around 1.08 percent at this point, a harbinger of things to come across China's eastern seaboard. They are all far below the stability level of 2.1 percent. The whole of east Asia faces an acute ageing crisis. It has already begun in Japan.
This blog from Ambrose Evans-Pritchard yesterday is a very interesting read and it's the second-last offering of the day from reader Roy Stephens.
United States Vice President Joe Biden said during a tour of Asia on Tuesday that the US is “deeply concerned” about recent efforts by China to re-draw airspace surrounding a series of islands between Taiwan and Japan.
"We, the United States, are deeply concerned by the attempt to unilaterally change the status quo in the East China Sea," Biden said during a Tuesday news conference alongside Japanese Prime Minister Shinzo Abe.
The airspace in that area has traditionally been controlled by Japan, but claimed by the Chinese as well. Late last month China proclaimed a portion of that area in the East China Sea as within their own air defense zone, prompting international tensions to tighten between all those involved in the Pacific Rim.
This Russia Today news item was posted on their Internet site early on Tuesday evening Moscow time, which was late yesterday morning in New York. I thank Roy Stephens for his final offering in today's column.
British Prime Minister David Cameron faced demands for the return of priceless artifacts looted from Beijing in the 19th century on Wednesday, the last day of his visit to China.
"When will Britain return the illegally plundered artifacts?" the organisation asked, referring to 23,000 items in the British Museum which it says were looted by the British Army, part of the Eight-Nation Alliance that put down the Boxer Rebellion at the end of the 19th century, a popular uprising against the incursion of European imperial powers in China.
To the Chinese, the ransacking of the Forbidden City, and the earlier destruction of the Old Summer Palace in Beijing in 1860 -- about which one British officer wrote: "You can scarcely imagine the beauty and magnificence of the places we burnt. It made one?s heart sore to burn them" -- remain key symbols of how the country was once dominated by foreign powers.
Well, dear reader, if you want to know one of the reasons that Britain gave Hong Kong back to China without a whimper, this is one of them...along with the other opium war that occurred earlier in the 19th century. This absolute must read commentary was posted on the france24.com Internet site early this morning...and I thank South African reader B.V. for sliding it into my in-box in the wee hours of this morning. That link to the "opium war" in this paragraph is a must read as well, as it includes China's connection to silver, amongst other things. We haven't heard the last of this, and one has to wonder what new direction China will go from here, as they're obviously turning up the heat on many fronts now.
Huawei Technologies Co., China’s largest maker of phone network equipment, said there is no basis for U.S. scrutiny of its contract to supply broadband equipment for a project in South Korea.
“Our gear is world-proven and trusted, connecting almost one-third of the world’s population,” Scott Sykes, a spokesman for Shenzhen-based Huawei, said in an e-mail today. “The motivations of those that might groundlessly purport otherwise are puzzling.”
U.S. Senator Dianne Feinstein, chairman of the Select Committee on Intelligence, and Senator Robert Menendez, who leads the Committee on Foreign Relations, sent a letter last week to Defense Secretary Chuck Hagel, Secretary of State John Kerry and James Clapper, the director of national intelligence. The lawmakers expressed concern that Huawei’s involvement creates risks for the U.S.-South Korea alliance, including for U.S. troops based on the peninsula.
If this isn't a case of the pot calling the kettle black, I don't know what is. This Bloomberg news item was posted on their website early yesterday evening Mountain Time...and I thank reader 'David in California' for bringing it to my attention, and now to yours.
1. Grant Williams: "Stunning Event is About to Completely Alter the War on Gold". 2. Jean-Marie Eveillard: "There Are Absolutely Terrifying Risks Facing Global Markets". 3. Ron Rosen: "60-Year Market Veteran - This Will Send Gold and Oil Soaring".
According to World Gold Council, gold is entering the country unofficially through India’s porous borders helped to meet pent-up demand, together with an influx of recycled gold that was drawn out by higher prices and promotions offered by retailers during the third quarter to end-September.
“Reports that a good market for 10-tola (100 grams) bars is re-emerging, due to the relative ease with which they can be concealed, reinforce this view,” the WGC said in a report last month.
The WGC report also noted that Thailand is being used as a route to channel gold into other markets, notably India and Vietnam.
“Investigations and seizures by financial intelligence agencies in the recent past have revealed that smugglers are now flying consignments of gold to Bangladesh and Nepal and then using couriers to carry them across the border,” the report said.
No story surprises me regarding gold smuggling into India. This one was posted on the firstpost.com Internet site yesterday...and it's worth reading. My thanks go out to Ulrike Marx once again.
Gold smugglers are adopting the methods of drug couriers to sidestep a government crackdown on imports of the precious metal, stashing gold in imported vehicles and even using mules who swallow nuggets to try to get them past airport security.
"Gold and narcotics operate as two different syndicates but gold smuggling has become more profitable and fashionable," said Kiran Kumar Karlapu, an official at Mumbai's Air Intelligence Unit.
"There has been a several-fold increase in gold smuggling this year after restrictions from the government, which has left narcotics behind."
From travellers laden head-to-toe in jewellery to passengers who conceal carbon-wrapped gold pieces in their bodies - in the mistaken belief that metal detectors will not be set off - Indians are smuggling in more bullion than ever, government officials say, driven by the country's insatiable demand for the metal.
This news item was posted on the Economic Times of India website this morning IST...and it's another contribution from Ulrike Marx.
Korea Exchange Inc. will begin physical gold trading on March 24 as Park Geun Hye’s government seeks to wring tax revenue out of a market that’s dominated by illegal transactions.
The exchange will use 1 gram units of bullion of 99.99 percent purity to spur liquidity and delivery will be in 1 kilogram bars, the bourse said in a statement today. Trading will start on a test basis for two weeks from Feb. 10 before full operations, it said.
South Koreans hold seven times as much gold as the 104.4 metric tons in their central bank’s vaults and the majority of trading is on the black market to evade import duty and value- added tax, according to government estimates. Park, who marks the one-year anniversary of her election as president this month, scaled back welfare pledges in September as her administration forecast the first drop in revenue in four years.
This Bloomberg story found a home over at the mineweb.com Internet site yesterday...and it's the final contribution of the day from Ulrike Marx.
For gold and silver bullion buyers, the question arises of where to take delivery of and safeguard your precious metals.
Taking physical delivery of your gold or silver is often the most rewarding part of the purchasing experience, as it gives you, the bullion investor, a fuller understanding of the real value of tangible monetary assets.
As one of the industry's leading bullion dealers, we at GoldSilver.com pride ourselves on investing and buying bullion right alongside our customers.
Because we are such proponents of taking physical delivery first, we have compiled a few creative storage solutions based on voluntary, anonymous, customer feedback.
This very interesting commentary was posted on the 24hgold.com Internet site on Monday...and it's definitely worth reading. My thanks go out to Elliot Simon for sending it our way.
A GATA supporter wrote the other day to the investor relations officer of a silver mining company in which he is invested to complain about the company's seeming indifference to the manipulation of the monetary metals markets. He soon received this reply:
"Thanks for your email. We share your frustration about the silver price. However, we don't attempt to take action against the bullion bankers for manipulation because 1) it is primarily the responsibility of the U.S. Commodity Futures Trading Commission, not the companies, to regulate these markets, so the companies would have to sue the bullion banks too; 2) manipulation is just too difficult to prove; 3) such a lawsuit would take many years and cost many millions of dollars with no certainty as to the outcome; and 4) every company invests its cash where it thinks it can create the biggest return to shareholders.
"In our case, we think investing shareholder money in things we can control, such as growing our business and our profits, is of greater benefit to our shareholders than investing in things we cannot control, such as suing the bullion bankers and the CFTC, both of which have far more financial and human clout than we companies do. They would just outspend us and stall for time."
This is the biggest bulls hit cop-out I can think of. There are a multitude of ways that the silver/gold mining industry [or a group of its members] can take a stand without a lawsuit of any kind...and it would put enormous pressure on the CFTC and the bullion banks involved. Of course it would be helpful if the World Gold Council and The Silver Institute would get onside on this...but these two organizations are there for precisely the purpose of insuring that this sort of action is never taken. All current and past directors of these organizations sold out to the dark side of The Force long before they were "invited" to serve in them.
I found this story on the gata.org Internet site last evening...and it's a must read for sure.